Pride often comes before a fall, and in the wake of the PlayStation 2’s unprecedented success, Sony had no shortage of pride. This is the story of how the creators of the all-time best selling console almost crippled its own successor’s early life.
But first, let’s briefly go back.
The Best-Selling Console in History
Born in 1950, and joining Sony in the 1970s, engineer Ken Kutaragi made a variety of radical decisions that eventually catapulted him into the spotlight as one of the gaming industry’s central figures in the 1990s. After seeing the potential that Nintendo’s gaming hardware had, Kutaragi agreed to work on the Super Famicom’s sound chip behind Sony’s back — a move that not only nearly ended his career before then-Sony CEO Norio Ohga intervened, but also planted the seeds that would bloom into one of the world’s biggest entertainment brands.
The PlayStation launched in 1994 in Japan (and 1995 in the west), and would go on to handily win its generation’s console war, selling over 102 million units by the end of its life. Sony’s PlayStation brand was cemented in the public consciousness, and anticipation for the PlayStation 2 reached a fever pitch in the year 2000, when it finally launched worldwide.
Though the PS2 was able to build off of the PS1’s incredible foundation, its massive success also came down to the good decisions that Sony made while developing and marketing this titanic successor.
The PS2 was designed with backwards compatibility in mind, letting users carry over their PS1 library — and their progress in it via memory cards. Though far from the first system to implement it, this backwards compatibility became a massive selling point, especially since the competition in the home console space at the time had no such equivalents.
Sony also continued to use the same marketing tactics that worked before with the PS1; they targeted 17-year olds with the mentality that younger players would aspire to reach that age, while older players would be lulled in by a sense of nostalgia for their younger days.
Perhaps most notable, however, was the choice of media formats and resulting compatibility. The PS2 was capable of playing DVD discs, and so could double as a home media player. Not only that, but the PS2 was also cheaper than your average standalone DVD player in its heyday, which suddenly made the system an incredibly tantalizing pick for even non-gamers.
Thanks to making all of the right moves at the right time, Sony was able to propel the PS2 to even greater heights than its predecessor; the console remains the best-selling system to this day, at over 160 million units pushed over its lifetime.
The games industry is ever-evolving though, and even after two massive successes in a row, Sony would eventually have to look towards the future and determine how best to shape the PlayStation brand going forward. In 2001, Ken Kutaragi made the announcement that Sony, Toshiba, and IBM would work jointly on developing the Cell microprocessor — tech that would become central to the PlayStation 3, whose botched launch would inadvertently shape gaming history even over a decade later.
“$599 US Dollars”
The PS2 broke new ground thanks to its DVD playback support letting it double as a media machine. Kutaragi wanted to take this even further, envisioning the PS3 not as a games console, but as a supercomputer with home entertainment capabilities. This approach is what led to Sony partnering with IBM and Toshiba to develop the Cell microprocessor — which had a budget of $400 million.
Though research and development was collaborative, all three companies had their own vision for how Cell would be used. While Sony would go on to make it the centerpiece of the PS3’s hardware, IBM and Toshiba saw the potential of using it for scientific and medical applications, as well as products like TVs.
And in the years following the PS3’s launch, the raw power of the architecture attracted other users who were able to build entire supercomputers by hooking up a bunch of PS3 consoles together in a cluster, such as the Air Force Research Laboratory, who used 1,760 PS3s to build the Condor Cluster at a far lower cost than what a typical supercomputer investment would run.
The Cell chip was powerful — boasting eight cores called Special Processing Elements — but difficult to program for. Sony’s first-party devs were excited for this new tech, believing that the head start they had in learning how to work with Cell would give them an advantage over third-parties…ignoring the fact that those same third-party developers are necessary lifeblood to sustain a console’s support and popularity.
Even as late as 2005, developers were struggling to put together launch titles for the PS3. There were no quality debuggers, drivers, or performance tools, and while first party developers struggled, third parties were even further behind, lacking the support and knowledge they needed to get their games working on the system.
Mark Cerny, the man who would later become PlayStation’s lead architect, had been brought onto the project as a consultant, and would later admit though he admired the PS3’s tech at the time, he failed to consider the possibility that it would render the system too expensive for players at launch. Compounding matters was the fact that Sony tossed aside its plans to use a proprietary graphics chip in favor of signing a deal with Nvidia to get their RSX chip for the system.
Sony also made the decision to add a Blu-ray drive to the system, something which further delayed the project and drove up costs. Though Blu-ray is a common standard nowadays, at the time, industry analyst Rob Enderle commented in 2007 that its inclusion was likely the killing blow to Kutaragi’s career at Sony, despite also speculating that the choice may have been forced on him by higher-ups.
And then came the infamous E3 2006 presentation. SCEA president Kazuo Hirai announced the PS3’s starting prices: $499 for the 20 GB model, and a whopping $599 for the 60 GB model. In today’s money, that’s equivalent to around $900. And when the console was shown off again at this press conference, though its controller design had been reverted back to the DualShock appearance (after its prototype resembled a boomerang), it was dubbed the SIXAXIS, and lacked rumble due to legal issues at the time.
It’s hard to overemphasize just how much this price tag felt like an out-of-character moment for Sony; they had virtually built the PlayStation empire on competitive and affordable pricing. The PS1’s “$299” announcement continues to be known as the “price heard around the world”, and was one of the major factors that led to the failure of the Sega Saturn. The PS2 also debuted with a $299 price tag, and while it matched the Xbox at the time, its DVD support also made it an affordable entry-level player in an era where the average price for a standalone device could reach $670 and higher.
Ken Kutaragi, for his part, didn’t do himself any favors during the system’s pre-launch marketing period. While players and the media alike balked at the hefty price tag, “Krazy Ken” responded by saying the system was “probably too cheap.” He even went as far as to claim that Sony’s goal was to entice consumers so strongly that they would be willing to work extra hours to afford the system, saying, “We want people to feel that they want it, irrespective of anything else.”
So assured was Kutaragi in the PS3’s success that he even made a comment about the Xbox 360, stating, “Beating us for a short moment is like accidentally winning a point from a Shihan (karate master), and Microsoft is still not a black belt.”
This kind of messaging, as well as Kutaragi’s insistence that the PS3 was “not a game machine”, and comments calling the Xbox 360 an “Xbox 1.5”, painted an image of an arrogant Sony that neither respected nor cared for gamers. Sony’s decisions came off as an act of hubris, designed to sell consumers on the company’s investments in Cell and Blu-ray tech.
While the price tag turned away gamers, the Cell architecture and aforementioned difficulties turned away developers. As Valve president Gabe Newell himself stated in a 2007 interview with Game Informer, “The PS3 is a total disaster on so many levels. I think it’s really clear that Sony lost track of what consumers and what developers wanted.”
Microsoft, meanwhile, had not only beaten Sony to the punch by a year with the Xbox 360, but was considerably undercutting the PS3, having launched the 360 at $299 for the Core model, and $399 for the 20 GB model.
And though the 360 faced PR problems of its own — namely the infamous Red Ring of Death — it maintained the advantage over the PS3 for much of its early life. Its PowerPC-based architecture made development considerably easier than the competition, and this showed in a wide variety of third party games — such as Bayonetta and Red Dead Redemption — that ran much better on Microsoft’s hardware compared to Sony’s.
Speaking of undercutting, the PS3 had an even bigger rival to contend with during its launch period: the Nintendo Wii. Initially drawing skepticism for its name and focus on casual gamers, Nintendo’s modestly powered and priced machine took the gaming industry by storm with its motion controls and a solid launch lineup that included games like Wii Sports, Trauma Center Second Opinion, and The Legend of Zelda: Twilight Princess.
The PS3 itself would launch in November of 2006 to relatively mixed reception. The system’s technical might have impressed critics, but with a lackluster launch library, reviewers and gamers alike weren’t left with much aside from the promise of what the PS3 could become years down the line.
The PS3 also had its own hardware issues, such as the yellow light of death that was frequent enough to push BBC into publishing a report on the subject, which Sony had to subsequently refute.
Krazy Ken
Amidst the PS3’s early struggles, the father of PlayStation, Ken Kutaragi, would step down from his position as president of Sony Computer Entertainment. It’s worth noting, however, that the flurry of PR embarrassments that marred the PS3 were merely a culmination of years’ worth of corporate politics and maneuvers.
In the earlier days of Kutaragi’s career at Sony, he had been bailed out by CEO Norio Ohga after having enraged his superiors by working behind Sony’s back on the Super Famicom’s sound chip. Though Ohga was a strong ally who believed in Kutaragi’s vision and approach, he obviously wouldn’t be around forever. Ohga’s pick for the next Sony president was one Nobuyuki Idei, whose résumé included being a director at companies such as General Motors and Nestlé.
Idei, however, did not come from an engineering background, unlike his predecessors. This made his appointment a controversial one, and Idei himself would go on to make sweeping reforms during his time at Sony. Sony’s video game division, however, would avoid most of these reforms, due mainly to Ohga’s insistence that Idei put his trust in Kutaragi.
This trust, however, wouldn’t last, and Kutaragi was eventually given control of Sony’s whole consumer electronics division. On paper, this was a massive promotion — but reading between the lines of what was going on at the time paints a different picture.
This promotion meant that Kutaragi inherited a division that, at the time, was struggling to keep pace with the likes of Apple and Samsung. Kutaragi himself was unpopular in this division, having made critical comments about it in the past. To make matters worse, “Krazy Ken’s” solution to the problems Sony was facing was to throw cutting edge technology at it, when what the company really needed was innovation. Kutaragi’s attitude only served to make him more and more controversial within Sony walls, and without Ohga to bail him out, Kutaragi simply lost support as time went on.
Kutaragi himself also seemed to imply that he either knew that the writing was on the wall, or had plans of his own to step down following the PS3 launch. When questioned by Sony’s chairman at the time, Shigeo Maruyama, Kutaragi stated that the “PlayStation 4 is not my responsibility.”
Despite Kutaragi having once been thought of as the obvious successor to Idei after the latter’s resignation, Sony instead brought in Welsh-American Howard Stringer as the next president of Sony in 2005. Kutaragi would lose his control over the consumer electronics division, and went back to SCEI to focus on the PS3, where his penchant for cutting edge tech and outrageous statements hobbled the system’s launch and sounded the death knell for his career at Sony. The man himself would ultimately step down from his position as chief executive at SCEI in 2007.
The Eventual Comeback
The first year for the PS3 was something of a struggle; its launch titles consisted of games like Call of Duty 3 (also available on much cheaper platforms), Genji: Days of the Blade (the infamous “giant enemy crab” game, which reviewed poorly), and Resistance: Fall of Man (developed by Insomniac Games and had the best reviews of the lot).
Although it did receive multi-platform releases like Call of Duty 4: Modern Warfare and the original Assassin’s Creed, truly stellar exclusives in 2007 were limited only to the likes of Ratchet and Clank Future: Tools of Destruction and Uncharted: Drake’s Fortune. Other acclaimed third-party games that year, such as BioShock and Mass Effect, would take well over a year to eventually make the jump from Xbox 360 to PS3.
Not helping matters was the fact that even at its infamous $499 and $599 price tags, Sony was selling the PS3 at a sizable loss of over $300 per 20 GB unit, and an extra $240 on top for 60 GB models. Meanwhile, a shortage of critical parts for manufacturing the Blu-ray drive played a key role in delaying the system’s European release to March of 2007.
Sony did eventually begin to right the ship by 2009. Though it sacrificed PS2 backwards compatibility, bringing back rumble support with the DualShock 3 and slashing the price down to that sweet, sweet $299 made the 2009 PS3 Slim revision a much more attractive purchase.
The PS3’s struggles didn’t end there, however. The system had actually been built with Linux support in mind, allowing users to transform their console into a full-fledged home computer if they so choose. Slim models, however, lacked this functionality, and all prior PS3 models had Linux support completely removed in April 2010 via firmware update 3.21. In response, users filed a class action lawsuit against Sony later that month, alleging that it was a violation of California’s Unfair Competition Law. This legal drama would stretch on for years, until Sony finally agreed to settle with the aggrieved in late 2018.
The worst of it would come in April of 2011, when the PlayStation Network servers suffered a major security breach. Over 77 million accounts had sensitive information exposed, and the whole ordeal left servers down for 23 days. Such a massive data breach also drew government attention, and Sony’s cleanup efforts in the aftermath of the hack would cost them a whopping $171 million.
While Sony’s first-party lineup would improve by 2009 and 2010, with releases like Uncharted 2, inFamous, and God of War III taking better advantage of the hardware, third-party releases continued to struggle.
Red Dead Redemption, for instance, saw better visuals and performance on the 360 than PS3, while the PS3 port of Bayonetta suffered from major frame rate problems. And, of course, we can’t forget Skyrim, which suffered slowdown and game-breaking crashes as players put more time into the game and thus inflated the sizes of their save files.
Due to the Xbox 360’s head start, ease of development, and position in the market, many games were developed first for the 360 before being ported to the PS3, either during development, or after launch. But things did start to change once that Slim model came out.
Over the following years, Sony would continue to bolster the PS3 library by publishing critically acclaimed hits like Uncharted 4 and 3, Journey, and The Last of Us. And by the time of the console generation’s sunset, the PS3 had become something of a haven for Japanese-developed games, with the Xbox 360 losing out on games like Metal Gear Solid 4, the Yakuza series, and multiple entries in the Tales series.
Third-party releases also began to improve as developers got the hang of the architecture, with the likes of Final Fantasy XIII actually seeing superior visuals and performance on PS3. Even Gabe Newell himself had warmed up to the PS3, going as far as to say it was the best console to play Valve’s then-upcoming Portal 2 on.
Thanks to Sony’s price cut, the steady stream of first-party blockbusters, and gradual improvement of third-party offerings, the PS3 was able to turn its fortunes around. By 2013, the PS3 had managed to surpass the Xbox 360 in sales figures, despite having started with major disadvantages, some of them self-inflicted.
But ultimately, a botched launch is still a botched launch, and Sony had important lessons to learn if it was to avoid repeating the same mistakes for the PS4’s launch.
The PS3’s beloved successor hit the ground running, reverting back to a more PC-like architecture for ease of development, changed its marketing strategy to better align with its core audience, and launched with a far more reasonable price of $399 (that also happened to undercut the Xbox One’s price of $499). Whereas the PS3’s first holiday season had it ship 1.7 million units, the PS4 more than doubled that amount, pushing 4.2 million units. Sony had learned its lesson, and avoiding their past hubris would lead to their continued success even two generations later.
The PS3 stumbled so the PS4 (and PS5) could sprint, but it still remains one of the most successful consoles ever made, and also just one of the most interesting. And sometimes, straight up weird.
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